Increased Consumer Complaints Over Online Credit Scams

In the digital age, consumer complaints about fraudulent activities in the realm of online loans have surged, with the number of complaints increasing by more than a quarter in the first half of this year compared to the same period last year.

One of the main concerns is the practice of "pushed-through contracts," where contracts are signed without the knowledge or explicit consent of the individual. These contracts can be the result of deception or misleading statements, leading to numerous cases of fraud.

Instead of honouring their commitments, such as confirming accounts, paying out winnings, or securing capital as promised, these fraudsters have been found to take out loans in the victims' names or open accounts over which they had no control.

Multiple consumers have reported encounters with fraudulent trading platforms or supposed financial service providers, trying to persuade them to perform a video identification procedure. One consumer even reported being contacted via WhatsApp by a supposed bank, claiming costs for a loan of 20,000 euros and collecting 1,300 euros in payments before breaking off contact.

The Federation of German Consumer Organizations (vzbv) has been tracking these complaints. In the first half of last year, there were 273 complaints about irregularities with online loans, and this year, there have been 476 complaints according to the vzbv.

The President of the Federation, Ramona Pop, advocates for requiring a signature for concluding a credit agreement. She warns that without a signature, fraudsters may find it easier to commit fraud. Pop views the increasing number of complaints as an argument against a proposed legal change that would allow general consumer credit agreements to be concluded with only the text form, rather than the written form.

The proposal for this change comes from the Federal Ministry of Justice and Consumer Protection (Bundesministerium der Justiz und für Verbraucherschutz). The ministry sees this proposal as a contribution to reducing unnecessary bureaucratic hurdles. However, the vzbv and Ramona Pop argue that the ease of concluding agreements could lead to more opportunities for fraud.

The Ministry of Justice's proposal is that in the future, the text form will be sufficient for the conclusion of general consumer credit agreements and other financial assistance, eliminating the need for a signature. This could potentially streamline the process, but raises concerns about the potential for increased fraudulent activities. The debate continues as both parties strive to protect consumers while maintaining a user-friendly process.